Popular & Prudent

 

As s the present term of Narendra Modi government completes in May 2019, amidst speculations whether the budget to be presented by the present officiating Finance Minister Piyush Goyal would be an interim budget or the final; whether the government would be able to make announcements having significant budgetary effect or not, the budget 2019-20 has finally been presented. It contains a host of new announcements, which though may be undermined by the opposition, but the same may not be rolled back in any circumstances, as they have been welcomed by one and all. The government has made its intent clear about the welfare of small farmers, poor, small scale enterprises and workers, especially of unorganised sector.

 

 

 

For long, the farm crisis has been the issue of hot debate. The politics of farm loan waivers has been impacting even the poll results, as we have noticed in the last assembly elections. Although, the incumbent government at the Centre has been trying hard to adopt broader policies for the welfare of farmers and creation of employment opportunities in rural areas. Last budget witnessed announcement of remunerative prices for farm produce covering 22 agricultural produces, by offering minimum support price equivalent to 150 per cent or more of the cost of production. However, it was being felt that this alone would not be sufficient to satisfy the needs of the farming community, and also to double farmers’ income by 2022. Fast increasing input cost of farming and insufficient increase in the prices of agricultural produce has been making the lives of the farmers miserable. As per the latest National Bank for Agriculture and Rural Development (NABARD) Report, in rural areas, hardly 23 per cent of the households’ income comes from agriculture and rest comes from wages, salaries and enterprises. The situation is that per capita income in villages is less than Rs 23,000 per annum, whereas in the cities it is 12.3 times more i.e. Rs 2,89,000.

 

To resolve the problem of rural-urban divide, there is a need to increase the income of the villagers. In this budget a provision has been made to transfer Rs. 6000 per farm households with farm holding of 2 hectares or less. For this Rs. 75,000 crore budget has been allocated. This seems to be the first step towards ‘universal basic income’, that is, minimum assured income for all in the country.

 

What is needed is that facility of subsidised loans be extended to food processing, mushroom production, rural artisans, poultry, etc. as has been done for animal husbandry and fishing by offering interest subvention of 2 per cent for these activities, where there is lot of scope for additional employment opportunities. This would go a long way towards the development and increase in incomes in rural areas.

 

Provision of pension to the unorganised sector workers is a wonderful step. As we find that scheme envisages pension of Rs 3000, after the age of 60 years, for those with income up to Rs 15000, for a paltry contribution of Rs 100 per month, the provision of Rs 3000 per month. If one enters at the age of 18, then only Rs 55 will be needed to be deposited every month, for the same. Pension to workers in unorganized workers will also be a major step towards equality. An increase in health and education budget is also an admirable step.

 

Taking the income tax exemption limit up to five lakh, which has been long pending demand, is a major leap, which will benefit about 30 million people. Simultaneously, raising the standard deduction from Rs 40,000 to Rs 50,000 for salaried class is also a relief. Gratuity limit too has been raised from one million to 30 lakh. These are all welcome steps for middle and salaried class. Making the benefit of capital gains applicable to second house as well, can also encourage the middle-class investment in housing which will give boost to housing.

 

Small businesses registered with GST have been offered interest subvention of 2 per cent for the first time in history, which is also commendable. The GeM, an online portal for government procurement, will now be opened for the Central Public Sector Enterprises also and it will be easier for small enterprises to sell their produce.

 

Taking the defence budget to Rs 3 lakh crore, provision for infrastructure including railways, renewable energy are all welcome steps. Boost to electric vehicles is a step towards clean environment and shows government’s commitment in this direction.

 

But increased allocation for MNREGA to Rs 60,000 crore, allocation of Rs 75,000 crore for introduction of income support to farmers, pension for unorganised workers etc could have jeopardised the budget calculations. However, it gives solace that fiscal deficit is contained to the same level in the Budget 2019-20, as that of current year (2018-19) revised estimates; that is, 3.4 per cent of GDP. This is something significant that, the size of the total budget has been increased from Rs 24,42,213 crores in 2018-19, to Rs 27,84,200 crores, an increase of (i.e. Rs 3,41,987 crores), however, but in spite of this big hike, fiscal deficit is contained at 3.4 per cent of GDP. Though, in the Budget 2018-19 Fiscal Deficit was estimated to be 3.3 per cent of GDP, revised estimates for 2018-19, show last year’s revised estimates show the same at 3.4 per cent of GDP, as expenditure in 2018-19 is expected to exceed budget estimates. How Finance Minister could contain fiscal deficit to 3.4 percent of GDP? This could be made possible primarily by higher receipts from taxation. It’s notable that additional net receipts to the central government after shedding states share for 2019-20 is estimated to be 2.52 lakh crore more than budget estimates for 2018-19 and 2.2 lakh crore higher than the revised estimates, which is a record. It is notable that budget estimates show extra Rs 1.18 lakh crore receipts from GST, Rs 0.9 lakh crore from income tax and Rs 0.15 lakh crore from customs.